Article contributed by Allen Schole and Robert Sakosky, Ellenoff, Grossman & Schole LLP
While we have had the opportunity throughout our careers to work with a number of innovative developers in connection with their retail projects, we have been fortunate to be engaged by the owners of the Essex Crossing and their retail development partner, The Prusik Group, to focus on leasing of approximately 400K square feet of retail space within a remarkable 1.8 million square foot mixed use development on nine sites on the Lower East Side.
This space includes a unique underground market, known as The Market Line that will feature a food hall in the initial phase and a variety of other businesses as the same is expanded. The food hall will be a 150K square foot culinary bazaar running underground along Delancey Street and featuring numerous food vendors and purveyors. It will have an open-air feel, with 65-foot-high ceilings surrounded by 45-foot-high glass walls to preserve the natural light. Most of the vendors will be operating in spaces that will range from 150 to 1,000 square feet with the average being 500.
Because of the large number of vendors that will occupy the Market Line, ownership and the legal team decided to develop more streamlined documentation that is about 50% shorter than traditional retail leases, which often contain 60 pages or more. Vendors are required to use the ownership’s form so as to facilitate easy administration of these agreements. Much of the operational controls and common area maintenance aspects for the vendors are set forth in a separate, easy to read manual that sets forth uniform standards relating to such matters as cleaning, trash removal, deliveries, crowd control, point of sale systems, food safety, employee conduct, and construction design and review.
The manual also contains all of the necessary information for the vendors to use and share the common areas in an efficient and productive manner. The vendors are accepting of this approach because they are just as interested as the owner in having a unified and appealing environment for their customers while permitting them to retain their own individuality for their selling space.
There are a number of key points that are considered in the legal documentation. Each vendor is required to have a primary use of their space so that the Market Line will contain a diverse array of offerings that enhance the culinary experience of the customers while allowing each vendor to maximize the sale of its specialized products. For example, there will be, among many other types of vendors, a German food purveyor, a Japanese restaurant, a Seafood restaurant and shop, a Dim Sum and Chinese dumpling shop, and shops selling primarily coffees, teas or juices.
Vendors are subject to strict operating covenants to assure that the market will always have an “open for business” feel so as to draw as many customers as possible. And, to facilitate timely openings of food operations, ownership has implemented a construction procedure that eliminates much of the “red tape” that a small, mom and pop business would like to avoid in dealing with construction permits and other construction activities. These arrangements, along with the shared common facilities (which are included in the fees to be paid for the spaces), are all intended to allow the vendors to focus on their core business of selling high quality fare.
If you think the Market Line is the right place for your business, please call us or drop us a line. Allen Schole and Robert Sakosky can be reached via phone at 212-370-1300 or via email at schole@egsllp.com and rsakosky@egsllp.com. Or you can contact The Prusik Group at 212-704-3879 who will guide you through this process.
Allen Schole has represented publicly-held and private companies, financial institutions and individuals. His practice has emphasized the purchase and sale of buildings, shopping centers, industrial properties and undeveloped real estate. He has represented lenders and borrowers in all phases of commercial lending, Mr. Schole has negotiated to retail, office and warehouse space leases.
Robert P. Sakosky, a member of the Firm, specializes in real estate law. Mr. Sakosky has extensive experience in representing landlords and tenants in lease negotiations with respect to office and retail space and other commercial properties. He also has experience in representing owners and developers in the acquisition, sale, and financing of commercial properties.
